Correlation Between Huaku Development and Prime Oil
Can any of the company-specific risk be diversified away by investing in both Huaku Development and Prime Oil at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Huaku Development and Prime Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Huaku Development Co and Prime Oil Chemical, you can compare the effects of market volatilities on Huaku Development and Prime Oil and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Huaku Development with a short position of Prime Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huaku Development and Prime Oil.
Diversification Opportunities for Huaku Development and Prime Oil
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Huaku and Prime is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Huaku Development Co and Prime Oil Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Oil Chemical and Huaku Development is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Huaku Development Co are associated (or correlated) with Prime Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Oil Chemical has no effect on the direction of Huaku Development i.e., Huaku Development and Prime Oil go up and down completely randomly.
Pair Corralation between Huaku Development and Prime Oil
Assuming the 90 days trading horizon Huaku Development Co is expected to generate 4.67 times more return on investment than Prime Oil. However, Huaku Development is 4.67 times more volatile than Prime Oil Chemical. It trades about 0.13 of its potential returns per unit of risk. Prime Oil Chemical is currently generating about -0.16 per unit of risk. If you would invest 11,850 in Huaku Development Co on August 27, 2024 and sell it today you would earn a total of 650.00 from holding Huaku Development Co or generate 5.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Huaku Development Co vs. Prime Oil Chemical
Performance |
| Timeline |
| Huaku Development |
| Prime Oil Chemical |
Huaku Development and Prime Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huaku Development and Prime Oil
The main advantage of trading using opposite Huaku Development and Prime Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huaku Development position performs unexpectedly, Prime Oil can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Prime Oil will offset losses from the drop in Prime Oil's long position.| Huaku Development vs. Chong Hong Construction | Huaku Development vs. Highwealth Construction Corp | Huaku Development vs. Fubon Financial Holding | Huaku Development vs. CTBC Financial Holding |
| Prime Oil vs. President Chain Store | Prime Oil vs. Huaku Development Co | Prime Oil vs. Formosa International Hotels | Prime Oil vs. Mercuries Associates Holding |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Money Managers module to screen money managers from public funds and ETFs managed around the world.
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